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Discontinued Operation Calculations

7.
On May 1, Foxtrot Co. prepared a formal agreement to sell Footwear Division.

The following additional facts pertain to the transaction:

·The Footwear Division operations and cash flows can be clearly distinguished operationally and for financial reporting purposes from the rest of the company.

·Footwear's assets totaled $48 million on Foxtrot's books at year end.

·Footwear's contribution to Foxtrot's operating income was a pre-tax loss of $10 million in 20X8.

·Foxtrot's income tax rate is 40%.

Suppose that the Footwear Division's assets had not been sold by December 31, 20X8, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In the 20X8 income statement for Foxtrot Co., it would report a ______ from discontinued operations: (be sure and write out your answer as a loss or gain with the word million by the number; eg. $5 million loss.)

_________________?

8. See the attached file and answer the following question:

What was the company's operating profit during the year?

__________?

3.
The difference between single-step and multiple-step income statements is primarily an issue of:

Consistency
Presentation
Measurement
Valuation

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7. On May 1, Foxtrot Co. prepared a formal agreement to sell Footwear Division.

The following additional facts pertain to the transaction:

?The Footwear Division operations and cash flows can be clearly distinguished operationally and for financial reporting purposes from the rest of the company.

?Footwear's assets totaled ...

Solution Summary

This file contains a formatted MS Excel spreadsheet that illustrates the use of, and determination for Discontinued Operations.

$2.19